What Is Current Monthly Income?
By Jay Fleischman, New York Bankruptcy Lawyer on Jan 29, 2007 in Chapter 13 Bankruptcy, Chapter 7 Bankruptcy
The first step in determining whether your qualify for Chapter 7 or Chapter 13 bankruptcy is to look at your Current Monthly Income. Before you go looking at your pay stub, realize that Current Monthly Income is neither current, nor monthly, not income. Sounds like a Saturday Night Live skit, doesn’t it?
Well, if Current Monthly Income is none of those things then what is it? Well, according to the US Bankruptcy Code it is the average monthly income from all sources that the debtor receives (or in a joint case the debtor and the debtor’s spouse receive) without regard to whether such income is taxable income, derived during the 6-month period ending on (i) the last day of the calendar month immediately before the date of filing of the bankruptcy case OR (ii) the date on which current income is determined by the court. Current Monthly Income includes any amount paid on a regular basis for your household expenses, but excludes benefits received under the Social Security Act, payments to victims of war crimes or crimes against humanity on account of their status as victims of such crimes, and payments to victims of international or domestic terrorism.
What the heck does that mean? Alright, simply put it’s this - take all the money you’ve made over the past seven months from employment and self-employment. Now subtract the money you’ve made this month. Now divide that number by six. That’s your Current Monthly Income.
In other words, let’s say it’s January (and it is, so we’re OK to make that assumption). You look to the gross amount of money you’ve made from July 1 - December 31 from employment and self-employment (we’re assuming you’re not married and live a fairly simple life free of real estate income, inheritances, etc.) and divide by six. That figure is your Current Monthly Income.
That’s why your lawyer needs all those documents in order to analyze your situation. Of course, this is all a gross simplification but it just goes to prove the point - not current, not monthly, and not necessarily income.
Technorati Tags: chapter 7, chapter 13, CMI
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